Key Points
Oklo could be an unprofitable, cash-burning machine for years to come.
The company's reactors, however, could play a key role in the rapid growth related to artificial intelligence.
Its reactors could offer clean energy solutions to rising energy needs.
One of the hottest growth stocks of 2025 is on sale this year. Nuclear energy stock Oklo(NYSE: OKLO) rose a staggering 238% last year, and that's even with it declining toward the end of the year. This year hasn't been nearly as impressive for Oklo, with its shares down 10% thus far.
Its decline has been going on for several months, and it's now down 67% from its 52-week high of $193.84. While growth investors still see a lot of potential for the stock as a result of growing energy needs due to artificial intelligence (AI), it may have soared too much in too short a time frame.
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Now with its valuation lower and market cap around $10 billion, is Oklo a more tenable investment, and could it prove to be a steal of a deal for long-term AI investors?
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It may take years before Oklo generates any revenue
The problem with Oklo's stock is that its valuation is tied largely to future energy needs and expectations. Investors have constantly heard about the ongoing need for more data centers and investments to help power AI. And Oklo could play a key part in that process by providing data centers with clean energy.
However, it can still be a while before the business starts generating any revenue. Oklo's Aurora powerhouse might not be up and running for a couple of years. In the meantime, it's expectations that will fuel much of Oklo's stock performance. The company has not generated any revenue yet, and over the trailing 12 months, it has incurred $76.6 million in losses and burned through $62.2 million from its day-to-day operating activities.
Why Oklo's stock is likely to remain volatile
When there was plenty of bullishness around AI, Oklo's stock was soaring. But now that investors are growing more concerned about sky-high AI spending and expectations, Oklo's stock has come crashing down in value. That trend is likely to continue, given that at this stage, Oklo is a highly speculative investment.
Although the stock is down significantly from its highs, its valuation remains inflated for a company with no revenue. Given the apprehension from tech investors of late, I wouldn't be surprised if it were to decline even further in value as the year goes on. Oklo is a highly risky and unpredictable stock to own. There isn't a compelling case to rush out and buy shares of it right now, and there are plenty of other AI stocks to buy that don't come with nearly as much risk as Oklo.
Should you buy stock in Oklo right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
